Is Switzerland losing its place in the world?

After a year of tumult, some are warning that a system built on neutrality, consensus and direct democracy is not moving fast enough.

- Mercedes Ruehl

It was a remarkably blunt public warning from the top of Switzerland’s biggest bank.

UBS chair Colm Kelleher declared in November that Switzerland was a “crossroads with major challenges”.

As evidence, he cited fierce competition in wealth management, US tariffs that have hit pharmaceuticals and other export sectors, and a regulatory environment that he regards as increasingly out of sync with more liberal regimes.

He is not alone. Mr Severin Schwan, the chair of Basel-based pharma giant Roche, warned at a panel discussion in December that Switzerland faces a “critical” moment and should be “very worried - even paranoid” that global investment pressures and slow political decision-making threaten its competitiveness.

In a country that prefers to avoid global headlines, such rebukes from pillars of its corporate establishment are a sign of how uncomfortable this year has been.

For much of the postwar period, Switzerland appeared insulated from many of the pressures affecting its European neighbours. Its decentralised direct democracy produced consensus; the franc was one of the world’s best safe-haven currencies; its industrial and diplomatic foundations were solid and predictable.

The past year has challenged that sense of insulation.

“Switzerland has had its crises over the years, but this one feels particularly sharp,” says Mr Walter Thurnherr, a former chancellor and chief of staff of the Swiss Federal Council. “There is an uneasy feeling of being at a schoolyard, bullied by a sixth-grader without a teacher present.”

Mr David Bach, president and geopolitical expert at business school IMD, adds: “The tension has come from multiple directions this year.”

Long-simmering questions about Switzerland’s neutrality and its stalled relationship with the EU, once treated as distant background issues, have become urgent and unavoidable. Both threaten to spill into highly polarising referendum fights.